As a seasoned crypto investor with over two decades of experience in the financial markets, I find Powell’s reiteration of the Federal Reserve’s stance on Bitcoin reserves to be nothing new under the sun. However, given the political climate and the recent push for a national strategic Bitcoin reserve under President Trump, it’s understandable that his comments are drawing attention this time around.
In simpler terms, Jerome Powell, as the head of the Federal Reserve, reinforced that the current legal standpoint does not support a Bitcoin reserve.
In simple terms, during his regular speech following the announcement of financial policies, Chair Powell clarified that the United States Federal Reserve does not have the authority to invest in or possess Bitcoin (BTC). As such, it lacks the capacity to maintain a reserve for this digital currency.
The banking regulatory body emphasized that existing rules do not allow for the Federal Reserve to maintain a Bitcoin reserve. Furthermore, the nation’s central bank shows no inclination towards any legislative adjustments that could establish an officially recognized government-held Bitcoin deposit, as indicated by Powell.
Powell made his comments not long after the final meeting of the Federal Open Market Committee in the year, where the Fed declared a reduction of 25 basis points in interest rates. Subsequently, Bitcoin experienced a decrease, dropping by 2.1% within an hour and currently standing at approximately $101,400.
Powell’s Bitcoin comments not new
It’s no surprise that Powell has said this before, as he has consistently made similar remarks following multiple Federal Open Market Committee (FOMC) meetings in the past.
For the first time since America elected Donald Trump as its 45th president, Powell has made such remarks. It’s Powell’s plan for a national strategic Bitcoin reserve that appears to have attracted attention to his comments this time around.
Although many legislators, such as Senator Cynthia Lumiss, and prominent figures in the industry endorse it, some crypto experts like Nic Carter from Castle Island Venture express reservations regarding this action. Specifically, Carter believes that establishing a U.S.-controlled Bitcoin reserve might generate concerns about the dollar’s durability and its position as the world’s primary reserve currency.
Castle Island Ventures partner Nic Carter doesn’t anticipate maintaining a strategic Bitcoin reserve, as such an action might undermine trust in global financial markets by suggesting that the U.S. dollar could be under threat.
— Bloomberg TV (@BloombergTV) December 17, 2024
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2024-12-19 00:02